Seven eyes water as mining tanks

Business Reporter

Seven Group is looking at new sectors such as agribusiness and water for growth as the group weathers a downturn in mining services which will see it cut 1000 staff from its Westrac business this year.

‘‘We’ve been given the remit from the chairman to take a look at growing (Seven Group)’’, the company’s chief executive, Don Voelte told reporters after its shareholder meeting in Sydney today.

‘‘Our executive team is actively looking at, analysing and negotiating new organic or acquisition targets associated with industrial services, energy, food and water,’’ he said at the meeting.

Seven Group has a wide range of interests including a 35 per cent stake in media group Seven West Media and an extensive share portfolio.

Mr Voelte said the company’s plan is to use the current downturn to make its existing businesses better and use its strong cash flow to ‘‘add to that portfolio with profitable and growth businesses of the future’’ which fit with its core competencies.

It does not mean the group will be decreasing its bet on the mining boom with Mr Voelte describing the downturn, which will see Seven Group earnings decline up to 40 per cent this year, as a ‘‘China anomaly’’ in a decade long growth curve.

Seven’s executive chairman strongly endorsed the view that the benefits of the mining boom are not at an end.

‘‘I’m very optimistic that, as a country, the mining industry is still going to hold this country together for the next decade at least, and as a supplier to that industry we expect that we will carve our place and do a lot better,’’ Mr Stokes said.

While conditions are still tough, Mr Voelte said there were signs that some sectors are through the worst of it.

‘‘You can’t discount that there’s going to be more disruption in the business, but I think in some of the commodities definitely we’ve hit the bottom,’’ Mr Voelte said.

According to Mr Stokes, the Westrac business was suffering due to the impact of declining gold, nickel and aluminium prices on its customers as well as the coal sector which is also suffering from a high Aussie dollar and lower pricing which means ‘‘our customers are hurting and looking for more efficiencies and lower costs.’’

Seven has said some of the $135 million worth of cost savings being delivered by Westrac this year will be passed on to customers as a means of winning more business and building market share.

Last week, the company announced further cost-cutting at the Westrac business, which provides most of its earnings, taking total staff cuts to 1000 employees this year with previous cuts proving to be insufficient ‘‘in view of continuing challenging market conditions".

Seven said it expected overall full-year underlying earnings to be at the lower end of its previous guidance of 30 per cent to 40 per cent below the previous year, "with a more marked reduction in the first half given the record comparative first half".